The market is a little bit overbought, not enough for me to officially use overbought as the title though. Some old readers may remember that I don’t use overbought as the title easily because all the overbought signals I watch are not normal signals therefore they’re quite reliable (so don’t tell me overbought can be more overbought, just search my past record to see what happened when I officially used overbought as the title. The most recent time I used overbought as the title was in 07/26 Market Recap). The purpose I mention the potential overbought in advance today is to remind bulls, especially if the market can manage another up day tomorrow, better take some profits as a pullback shall be imminent. Of course, the pullback, if indeed, most likely is just a short-term pullback.

Now let’s take a look at some of my so called not normal overbought signals.

Percent of SPX stocks 1 std dev above MA(50), the signal was originated from Bespoke. See highlighted in red, they’re all very close to a short-term top while today’s reading is the highest among them.

T2112, NYSE percent of stocks 2 std dev above MA(40), the horizontal blue line is the all time high before year 2009 and now we’re very close.

T2122, NYSE 4-week New High/Low Ratio, this is my ultimate weapon for watching overbought, now is very close to an extreme level.

1.0.0 S&P 500 SPDRs (SPY 60 min), chart pattern wise, a huge Bearish Rising Wedge could be in the forming which is pretty reliable as both top and bottom trend lines are 3 points validated. Besides, a 3rd Rounding Top could be in the forming, which if indeed the 3rd time is the charm, since the previous 2 were bullish Rounding Top, so the 3rd one could be bearish.

Please make sure you understand how to use the table above. The purpose of this report is to provide info so contradictory signals are always presented.

Conclusions can be confirmed endlessly, but trading wise, you have to take actions at certain risk level as soon as you feel the confirmation is enough. There’s no way for me to adapt to different risk levels therefore no specific buy/sell signals will be given in this report except the mechanical signals such as SPY ST Model.